3 reasons to explore price transparency in healthcare

Healthcare price transparency has become a buzzword in recent years, and for good reason—it has the potential to transform how Americans access care. For employers managing health insurance plans, price transparency is more than just an industry trend; it’s a functional tool that can shape workforce health, financial wellness, and overall satisfaction.¹

Let’s unpack the concept of healthcare price transparency, recent policies, and three key ways knowing costs of medical items in advance can drive meaningful changes for employers and employees alike.

What is price transparency in healthcare?

At its core, healthcare price transparency refers to making the cost of healthcare services and procedures clear to consumers before they receive care. This entails disclosing prices for treatments, services, and provider charges in a way that is accessible and accurate.

Key policies in recent years have propelled this concept forward:

• No Surprises Act (2022): This bipartisan legislation protects patients from surprise medical bills for out-of-network emergency services and air ambulance services. It ensures transparency in billing and pricing for services patients may not have control over.²

• Transparency in Coverage Rule (2020): This rule requires health insurers and employer-sponsored plans to disclose pricing information and create online tools to help consumers estimate their out-of-pocket costs for services, as well as provide more transparency for prescription drug pricing.³

• Hospital Price Transparency Rule (2021): Enforced by the Centers for Medicare & Medicaid Services (CMS), this rule mandates hospitals to publicly disclose pricing for 300 “shoppable” services in a machine-readable file and a consumer-friendly format.⁴

• Executive Action on Price Transparency (2025): Building on prior mandates, this executive order reinforces the need for hospitals to disclose real prices—not just estimates—for procedures, fostering greater consumer awareness.⁵

Though these policies aim to empower consumers, price transparency remains underutilized. This is where employers can step in to amplify its benefits.

1. Does price transparency encourage comparison shopping in healthcare?

Yes. One of the main objectives of price transparency is to enable consumers to compare costs between providers. This mirrors consumer behaviors in other markets, such as car insurance or airline ticket purchases, where people actively compare options to find the best value.

Research by McKinsey highlights the economic potential of such behavior. According to their findings, 89% of consumers expressed interest in shopping for care, and 33% to 52% would switch providers for financial incentives. Notably, shoppable healthcare services represent approximately 20% to 25% of total healthcare claim spending.¹

When employees can shop confidently for care using transparent pricing data, it helps promote healthy competition among providers. This competition encourages providers to deliver better care at more competitive rates, benefiting employers in reduced costs for healthcare insurance premiums. Employers can leverage this by integrating price comparison platforms into their benefits packages and educating employees on how and when to shop for care.

2. Can shoppable healthcare services lead to cost savings?

For organizations managing large healthcare expenditures, price transparency has the potential to reduce costs. A recent White House fact sheet on the subject states that through care comparison shopping, employers can see an average 27% reduction in healthcare costs for 500 common services.⁶

By knowing procedure costs in advance, employees can be more likely to choose cost-effective providers and procedures, resulting in reduced overall healthcare costs. For instance, imaging procedures like MRIs and CT scans can vary widely in price despite offering similar quality outcomes.⁷ Armed with transparent pricing information, employees can potentially identify providers offering these services at lower rates without compromising on quality.

McKinsey research discovered about 73% of spending on commercial claims was shoppable.¹ Going a step further, if about 30% of patients currently on commercial insurance began to shop for care—from prescription drugs to emergency services—they could price compare for about 20 to 25% of the spending on commercial healthcare claims. Simply put, when consumers can shop for even a portion of healthcare services, that impacts price sensitivity and a potential for lower prices.⁷

3. Can price transparency lead to improved wellbeing?

Beyond immediate savings, the long-term benefits of price transparency are equally compelling. Making informed healthcare decisions can foster efficiency, reduce waste, and empower consumers to focus on preventative care. When employees can shop for and ultimately receive lower-cost healthcare services, this increases the likelihood that the employees receive the care and don’t delay treatments.

For employers, price transparency aligns with broader efforts to improve financial wellness in the workplace. High-deductible health plans (HDHPs) have shifted more costs to employees, making them sensitive to healthcare prices. Access to clear price information ensures they can avoid surprise costs, likely leading to less financial stress.

How can employers make it easier to comparison shop for healthcare services?

Employers play a pivotal role in ensuring that the benefits of price transparency are fully realized. Here are a few actionable steps:

• Give employees easy-to-use, digital comparison tools: Implement cost-transparency tools that allow employees to easily compare provider rates, out-of-pocket costs, and quality scores.

• Educate employees: Provide training sessions or workshops to teach employees how to use cost comparison tools effectively. Help them understand how these tools can lower their out-of-pocket expenses.

• Offer incentives: Encourage employees to choose quality, cost-effective providers by offering rewards like Health Savings Account (HSA) contributions or cash-back programs.

These initiatives not only help improve employee satisfaction but also position organizations as leaders in health benefits innovation.

Lack of price transparency is a problem worth solving.

The push toward healthcare price transparency may be complicated, but the potential upside is immense. For employers, it represents an opportunity to reduce costs, foster more informed decisions, and improve overall employee wellbeing. With healthcare costs continuing to rise, tools that empower employees are not just helpful—they’re essential.

Employers and benefits managers should watch this space closely as new technologies and regulations continue to refine how price transparency can be utilized. By taking proactive steps to integrate transparency into your benefits structure, you ensure your workforce is equipped for better health and financial outcomes.

Curious about the latest tools for navigating the healthcare pricing landscape? Stay updated with our resources or connect with us for tailored solutions.